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Ferry firm CEO quizzed as inquiry speeds up

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Published : 2014-04-29 20:58
Updated : 2015-05-27 15:55

Prosecutors questioned Kim Han-sik, CEO of Chonghaejin Marine Co., on Tuesday as the scandal surrounding former Semo Group chairman Yoo Byung-eon continued to expand.

Chonghaejin Marine Co. is the operator of the ferry Sewol that sank off the coast of Jindo Island, South Jeolla Province, on April 16 killing at least 205 passengers and crew members.

The Incheon District Prosecutors’ Office also raided locations connected to Moonjin Media, a Chonghaejin affiliate headed by Yoo’s second son, Yoo Hyeok-gi. The locations raided Tuesday include the home of a former Moonjin Media executive identified as Kim. 
Kim Han-sik, CEO of Chonghaejin Marine Co.

Kim of Chonghaejin is suspected of having been closely involved in the extensive list of wrongdoings allegedly committed by Yoo and his family members.

The prosecution is also hoping to determine whether fees paid to paper companies registered to the Yoos were justifiable.

Among other suspect payments, the Yoos are thought to have received about 50 billion won ($48.5 million) from companies they operate for the use of trademarks registered under their names.

The Yoos hold the rights to the names of more than 1,600 companies, products and ships, including the Sewol. According to reports, Chonghaejin paid the Yoo family 1 million won each time the Sewol set sail.

Yoo, whose two sons, Yoo Hyeok-gi and Yoo Dae-gyun, effectively own Chonghaejin Marine Co. through I-One-I Holdings, is suspected of a range of illegal activities, including embezzlement and tax evasion. I-One-I Holdings is at the center of a complex cross-shareholding structure that gives the Yoos control over a large number of subsidiaries.

Starting with Kim, the prosecution plans to summon other close associates of Yoo within the week.

Summons have also been issued for individuals currently not in Korea, including Yoo Hyeok-gi, and chief of Hankook Pharma Co. Ltd. Kim Hye-kyung.

As part of the multipronged investigation sparked by the ferry disaster, the prosecution applied for arrest warrants for three Korea Shipping Association officials on charge of destroying evidence. The officials are suspected of destroying materials linked to alleged bribery by the association.

The association, along with the Korea Register of Shipping (KR), came under scrutiny after investigations into the Sewol revealed deep-rooted malpractice within the country’s shipping industry.

Meanwhile, the probe into the cause of the Sewol’s sinking is focusing on irregularities in the ship’s structure, cargo handling and emergency equipment.

In an attempt to verify claims that the ship was poorly balanced and that Chonghaejin Marine Co. customarily overloaded the vessel, the investigators have questioned surviving crew members and Chonghaejin Marine Co. officials. Officials from associated organizations including maintenance and safety service providers have also been questioned.

By Choi He-suk (cheesuk@heraldcorp.com)

* Pursuant to an order by the Press Arbitration Commission, we have been asked to publish the following statement from the Evangelical Baptist Church (EBC).



Evangelical Baptist Church (“EBC,” the “Salvation Group”*) and Mr. Yoo Byung-eun Related Corrections and Official Statement by EBC


After the April 16, 2014 Sewol ferry tragedy, the media published a flood of indiscriminate articles regarding the EBC (also known as Guwonpa* in Korean) and Mr. Yoo Byung-eun. Due to the immense volume of articles, it is impossible to correct and counter every single one. Therefore, in agreement with the EBC and the surviving family of Mr. Yoo Byung-eun, we are publishing the following combined corrections and Official Statement by EBC.


* This label, which is translated as the Salvation Group, has been applied disparagingly to the Evangelical Baptist Church

1. In regards to the claims that Mr. Yoo Byung-eun was the owner of the Sewol ferry vessel and the owner and Chief Executive Officer of Chonghaejin Marine Ltd (“Chonghaejin”) and its affiliated companies


The majority of the media reported that, as the owner of the Sewol ferry, Mr. Yoo Byung-eun directly managed Chonghaejin and its affiliated companies and that he used operating funds for personal purposes. However, Mr. Yoo retired from his executive management position in 1997. He did not own any shares in the noted companies, nor had he managed operations, nor used the operating funds for personal reasons. He was not the owner of the Sewol ferry, nor the Chief Executive Officer of Chonghaejin. As such, he had not provided any directives in regards to the overloading of the Sewol ferry or its renovation (e.g. expansion of the cabins and cargo area).  


2. In regards to the reports of Mr. Yoo Byung-eun’s accumulation of illicit funds and lobbying of lawmakers


Although some media outlets reported that Mr. Yoo Byung-eun had established favorable relationships by paying bribes to politicians, Korean Prosecutors’ Office verified last October that reports of such bribery activity were false. We hereby correct all articles pertaining to this matter.


3. In regards to the allegations of Mr. Yoo Byung-eun’s asset holdings in other people’s names and misappropriation of offerings made to the EBC


The majority of the media reported that Mr. Yoo Byung-eun was a wealthy billionaire who owned real estate properties, including Geumsuwon, both in Korea and abroad under other people’s names and that he diverted the tithes and offerings made to the EBC to an illicit fund and expanded his businesses.


The EBC has confirmed that reports of his wealth incorrectly included real estate properties owned by farming associations, which had been established by church members. Thus, these reported properties were not held by Mr. Yoo Byung-eun in another person’s name, but are owned by the noted farming associations.


Additionally, Mr. Yoo did not embezzle from the EBC nor did he expand his businesses by diverting tithes or offerings of the pertaining church and its members into an illicit fund.


4. In regards to the reports related to Mr. Yoo Byung-eun’s position within the EBC


The EBC has stated that Mr. Yoo Byung-eun was not a religious sect leader. Although he was ordained as a pastor in the 1970s by missionaries at the Far East Broadcasting Company, he did not serve as a pastor. There is no pastor in the EBC, since it is a congregation of laymen.


It was also verified that Mr. Yoo Byung-eun did not participate in the official

process to register EBC as a church in 1981, nor had he been revered as a religious sect leader or been made into a God-like figure by the pertaining church or its members.


5. In regards to reports that the EBC is a cult and that it has false doctrines


The majority of the media reported that the EBC is a religious cult and that it preaches doctrines that are not consistent with Christianity. There are certain churches in Korea that call the EBC a cult, solely based on differences between their and the EBC’s doctrines. However, the EBC has affirmed its belief in the Bible, the Trinity, Jesus’ conception by the Holy Spirit, His birth, death, and resurrection. The EBC does not worship a particular individual as a religious sect leader or preach any doctrine that contradicts the Bible.


6. In regards to reports that Lee Yong-wook, a senior Coast Guard official, and the Sewol ferry crew, including Captain Lee Jun-seok, are members of the EBC, and that the EBC managed Chonghaejin


It was verified that the captain and the crew members who abandoned the ship at the time of the Sewol ferry accident are not members of the EBC. Only two people have been confirmed as members of the EBC: the late Jeong Hyun-seon, who died while evacuating passengers and thus was designated a national hero, and another person, who had been rescuing passengers and was himself later rescued in an unconscious state. It has also been verified that the EBC does not own any shares of Chonghaejin and that it did not engage in its management. Furthermore, the EBC has stated that Lee Yong-wook, a senior Coast Guard official, has not attended the EBC for the past 15 years.


7. In regards to reports of Mr. Yoo Byung-eun’s attempt to flee the country by ship, reports of his seeking asylum and reports of his possession of firearms


The majority of the media reported that Mr. Yoo Byung-eun attempted to flee the country by ship, that he requested asylum in several countries but was rejected, and that he possessed firearms to protect himself. The prosecutors hastily announced without confirming the facts that Mr. Yoo Byung-eun attempted to seek asylum. However, two months later on August 18, the prosecutors revised their statement noting that “upon investigation into the identity of the caller, a person with no relation to the Salvation Group had placed a prank call.” In addition, there was no evidence of any attempt by Mr. Yoo to flee the country. It has also been confirmed that the firearms alleged to be in his possession were collectibles. Furthermore, not only were they collectibles that could not be operated they were also not in his possession while he was fleeing.


8. In regards to reports on allegations about the EBC’s and Mr. Yoo Byung-eun’s links to the Odaeyang incident and their relationship with the Fifth Republic of Korea


Some news articles created the impression that the EBC and Mr. Yoo Byung-eun were behind the Odaeyang mass suicide incident. Some also reported that Mr. Yoo Byung-eun had been able to rapidly grow the Semo Group in the 1980s (e.g. securing the business rights to operate the Han River Ferry Cruise) by using a connection with Mr. Chun Kyung-hwan and a close relationship with the former President Chun Doo-hwan’s Fifth Republic of Korea. However, the Odaeyang mass suicide incident was thoroughly investigated by the prosecution and the police three times—in 1987, 1989, and 1991. All three investigations concluded that the EBC and Mr. Yoo Byung-eun had no connection to the incident. Also, neither Mr. Yoo Byung-eun nor the EBC had any collusive ties with the Fifth Republic of Korea. All of this was verified in the official document issued from the Incheon District Prosecutors’ Office on May 21, 2014.


9. In regards to reports alleging that Mr. Yoo Byung-eun held photography exhibitions at the world’s top museums by donating funds and that he coerced purchases of his artworks


The artwork of Ahae (Mr. Yoo Byung-eun) was examined and authorized for exhibitions at renowned museums and exhibition sites in the United States and Europe by their screening committees. The exhibitions were unrelated to donations, and it was confirmed that there was no causal relationship between Ahae’s donation history and the exhibitions. Moreover, Mr. Yoo’s photography exhibitions were authorized by the committees after the directors of the respective museums had acknowledged the artistic value of Ahae’s works and subsequently proposed hosting the exhibitions. It has been confirmed that the exhibitions were not a result of Mr. Yoo’s patronage or donation. Additionally, the above museums have verified that an exhibition can never be authorized unless the artistic value of an artist’s works is recognized by the screening committee, irrespective of the amount of money an artist donates.

Additionally, it was reported that Mr. Yoo coerced Chonghaejin and its affiliates to purchase his photos at inflated prices. However, this has been confirmed to be false.


Lastly, the Evangelical Baptist Church has released the following statement to the media:


“We sincerely request of the press to serve the public’s right to know with objective and balanced reporting, guarding against biased arguments from its interviewees, all the while fulfilling its duty and responsibility to create no victims from such reporting.


We ask the press to reflect upon its manner of reporting on the Sewol ferry accident. Without waiting for the truth to be revealed through the completion of the investigative and judicial process, the reporting largely focused on releasing exclusive and sensational news reports, which led to misleading the public and essentially conducting a trial in the court of public opinion. We also ask the press to avoid compromising the democratic principles of a constitutional state and to prudently take strict precautions against those forces that aim to take advantage of this period of heartbreak for this nation in order to advance their own position and authority.”